While multi-level marketing and network marketing companies may generate significant sales through their legitimate retail offerings, their sales profiles do not typically match those of ordinary e-commerce websites.
The complexity of such companies and their structure is why an MLM merchant account will generally require a specialized underwriting process. The processor will need to understand what products the company sells, how compensation works for its distributors, what customers commit to purchasing from the company, and how the company controls returns, refunds, and recurring billing for these customers.
For the direct sellers that comprise these organizations, the goal will not just be to get the merchant account approved. Rather, they will want to establish a merchant account that can accommodate their growth in both distributors and sales.
Why Are MLM and Network Marketing Businesses Considered High Risk?
Payment providers look at both transaction risk and business model risk when evaluating MLM companies for payment processing.
The FTC uses factors such as what an MLM’s compensation plan incentivizes to determine whether it is legal. Companies must be able to provide a legitimate reason for the earnings levels of their participants.
In 2026, the FTC continues to investigate MLM companies based on their sales and earnings claims. The FTC recently took enforcement action against MLM companies for making deceptive sales and earnings claims. The FTC is proposing a regulation that would require MLMs to provide proof of sales if adopted. As of August 2026, the rule has not yet been officially adopted by the FTC.
An underwriter may therefore examine the following aspects of the organization:
Compensation plan
- Distributor agreement
- Product catalog and pricing
- Percentage of retail versus distributor purchases
- Starter kits and enrollment fees
- Income and lifestyle claims
- Product or health claims
- Autoship terms
- Cancellation procedures
- Refund and return policies
- Fulfillment times
- Distributor websites and social media
- Historical chargebacks and refunds
- Expected monthly volume
While many MLMs will include all of the elements mentioned above as a means of facilitating their sales efforts, those characteristics will also lead to an increase in the number of chargebacks and complaints from customers who have forgotten about their autoship products, who have purchased starter kits only to discover they cannot meet the sales requirements of the company, or who have been promised products or services by sales representatives that the company does not provide.
How to Get Approved for an MLM Merchant Account
The most important part of applying for an MLM merchant account is transparency.
Do not apply for a merchant account for a generic e-commerce business that plans to reveal its MLM nature during the application process. The MLM payment processor should be aware of the company’s distributor nature from the beginning of the application process.
Prepare the following information prior to applying for an MLM merchant account:
- Business formation documents
- Owner identification and banking information
- Product catalog and pricing
- Compensation plan
- Distributor agreement
- Website and checkout store URLs
- Information about the distributor website is replicated on the company website
- Income disclosure statement (if used by the MLM company)
- Refund and return policy
- Autoship and cancellation policies
- Shipping policies
- Customer service information
- Marketing compliance policies
- Sales volume and ticket sizes information
- Processing statements (if available)
- Chargeback and refund information (if available)
The processor will want to see that the products have retail value and that the compensation structure does not depend on recruiting new participants.
The distributor is also under observation. In June 2026, the FTC sent a reminder to multi-level marketing companies that both the companies and their distributors can be punished for making deceptive earnings claims. The merchant account application will be stronger if the company can explain how it reviews and removes deceptive claims on its platforms.
Another factor that will determine whether a company is accepted on a platform is the platform’s eligibility requirements. Stripe does not allow businesses that offer multi-level marketing with sales based on recruiting new participants. PayPal requires pre-approval for companies engaged in direct sales and multi-level marketing.
Specialized underwriting is therefore more important than choosing the company that offers the best self-service merchant account platform.
How to Set Up Payments for Autoship and Distributor Sales
Once the merchant account is approved by the payment provider, the payment gateway must support the way the MLM collects money from its distributors.
Typical e-commerce and MLM businesses require capabilities in the following areas:
- ecommerce checkout
- recurring autoship
- tokenized stored credentials
- Account Updater
- mobile payments
- virtual-terminal payments
- ACH
- distributor and customer identifiers
- refund management
- chargeback alerts
- multiple sales channel reporting
Payment Nerds can help MLM and direct-sales companies match their merchant account with a payment gateway and risk management software built around their sales model.
The recurring sales and subscription capabilities of both NMI and Authorize.net can be paired with an approved merchant account to support MLM businesses.
NMI offers recurring subscription and tokenized Customer Vault capabilities, while Authorize.net offers Automated Recurring Billing capabilities.
How to Reduce Autoship Payment Disputes and Chargebacks
Autoship can help generate revenue for your organization, but it can also lead to disputes.
Customers should understand what they are buying, the cost of their purchases, the billing frequency, when their next bill will come, whether their purchases will impact their distributor status, how to update their payment information, how to skip one of their Autoships, how to cancel their Autoship, and how to process returns and refunds.
Ensure that the process to cancel an Autoship is not buried within a distributor or customer service process that makes it difficult for customers to stop Autoships.
Furthermore, ensure that payment data collected for Autoships is tokenized rather than copied into spreadsheets, customer relationship management (CRM) software, or the distributor’s contact records. NMI’s Customer Vault, for instance, replaces stored payment credentials with tokens used to complete future Autoship transactions.
Separate Customer Payments From Distributor Commissions
The process of collecting money from customers and paying distributors is separate.
The merchant account receives both customer and distributor purchases. However, the compensation system calculates the commission paid to each distributor based on the company’s plan.
Do not use ordinary transactions to pay distributors’ commissions, reimburse purchases, or pay for internal company functions. All sales should be bona fide purchases of the company’s goods or services.
Ensure the payment platform can collect information for each transaction to accurately track the distributor, the product purchased, the marketing campaign, and the sales channel. This will allow the company to identify the cause of any sales and payment complaints by distributor or sales channel.
How MLM Businesses Can Reduce VAMP and Chargeback Risk
The Visa Acquirer Monitoring Program (VAMP) applies to MLM companies with card-not-present sales volumes and autoship products.
Visa monitors fraud and disputes at the merchant and acquirer levels and separately monitors automated card testing. Visa requires a minimum of 1,500 disputes and fraud cases before enrolling the merchant in the VAMP program. However, payment processors will monitor the merchants at a higher volume before reaching the thresholds established by Visa.
MLM companies should monitor disputes by the following factors:
- distributor
- product
- autoship plan
- acquisition campaign
- billing descriptor
- sales channel
- customer tenure
If one sales team has a high number of payment disputes, it may suggest that they have created false expectations for customers. If there are payment disputes for autoship products after the second or third shipment, it may indicate a problem with how autoship products are communicated to customers. If there is a high volume of fraud on one checkout sales page, it could be a sign of automated card testing.
Common MLM Payment Processing Mistakes
The biggest mistake is hiding the network-marketing model during underwriting. Other mistakes to avoid include:
- Using a processor that prohibits MLM use
- Emphasizing recruitment over retail sales demand
- Allowing claims about potential earnings that cannot be met
- Allowing distributors to make health and product claims
- Making autoship products difficult to cancel
- Prechecking autoship subscriptions
- Failing to preserve customer consent
- Charging fees for starter kits and memberships
- Using misleading billing descriptors
- Allowing refund requests to become chargebacks
- Buying payment processing infrastructure before obtaining merchant account approval
- Storing customer card data improperly
- Allowing volume spikes without explanation or reason
- Failing to track payment disputes by distributor
- Ignoring VAMP until the payment processor sends a warning message
- Using another merchant account to hide MLM sales
A good payment processing company will ask tough questions of every MLM company seeking approval for a merchant account. The questions will help ensure that the company that receives the merchant account approval is the same company that will process payments for the MLM.
MLM Merchant Account Questions
Q: What is an MLM merchant account?
A: An MLM merchant account is an acquiring account underwritten for companies that engage in MLM, network marketing, or direct sales activities. The processor will review the business and its products, MLM compensation, and MLM activity prior to processing any transactions.
Q: Why do MLM companies need high-risk payment processing?
A: Due to the nature of MLM companies, they often have sales that are card-not-present, autoships, distributor companies, and regulatory scrutiny. These factors pose a higher risk to MLM companies than to retail sales.
Q: What should I look for in an MLM payment processor?
A: An MLM payment processor should understand MLM sales, MLM distributors, sales returns, chargebacks, and regulatory compliance. The processor should be able to integrate with the sales and management software with a payment gateway and utilize VAMP monitoring software.
Q: Can Stripe process MLM payments?
A: Stripe’s restricted business policy prohibits companies that rely on selling products based on recruitment. As such, MLM companies should not use Stripe to process their payments.
Q: Can an MLM use PayPal?
A: PayPal has pre-approval requirements for companies that engage in MLM and direct sales of goods and services. If a company receives approval from PayPal, it can be used as the organization’s primary payment receiving platform.
Q: Can MLM companies use recurring billing?
A: Yes, but only if both the merchant account and the payment gateway that will receive the payments from customers approve of using a recurring billing system for the products and services that are to be provided by the MLM company.
Q: Can a new MLM get approved if they don’t have processing history?
A: While they won’t have processing history for their business, there will likely be other documentation that can make up the application and justify the need for the MLM company.
Q: Does VAMP apply to MLM merchant accounts?
A: Due to the nature of MLM companies, there is the potential for them to score high on VAMP due to the possibility of fraud and chargebacks associated with the MLM industry. However, by monitoring the distributors and autoship programs of the MLM company, there is potential to catch some of these issues before they occur.
Q: What kind of documents should I prepare for my MLM company?
A: Based on industry standards, the documentation that will be looked at most closely will be the compensation plan, distributor agreement, product catalog and descriptions, marketing and advertising content, autoship terms and policies, refund policy, and if the company already exists, their processing and chargeback history.
Keep Your MLM Merchant Account Stable as You Grow
While network marketing businesses have a stable merchant account, they should expect more due diligence than retail businesses. The merchant bank should understand the products, the compensation plan, and the distributors’ behavior before approving a merchant account.
Beyond launch, a merchant should monitor distributors’ claims, the ease of setting up autoships, the ease of resolving refunds, and the tracking of fraud and disputes related to VAMP by source. The merchant account will be the most stable if the merchant and the payment provider see the same business model as was approved for the merchant account.
Sources
- Federal Trade Commission. “Business Guidance Concerning Multi-Level Marketing.” Accessed August 2026.
- Federal Trade Commission. “Earnings Claim Rule Regarding Multi-Level Marketing.” Accessed August 2026.
- Federal Trade Commission. “Back Up Those Earnings Claims — and Other Lessons From the FTC’s Labor Task Force Work.” Accessed August 2026.
- Direct Selling Association. “2025 Growth & Outlook Study.” Accessed August 2026.
- Stripe. “Prohibited and Restricted Businesses.” Accessed August 2026.
- PayPal. “Acceptable Use Policy.” Accessed August 2026.
- NMI. “Customer Vault.” Accessed August 2026.
- Authorize.net. “Recurring Payments.” Accessed August 2026.
- Visa. “Evolving the Visa Acquirer Monitoring Program.” Accessed August 2026.
